What is the main difference between options and forwards?
In forwards, you lock an exchange rate or a future time. You don’t get benefit of any favorable movement in exchange rate and you also don’t get any loss from unfavourable movement. There is no upfront cost of doing forwards.
In an option there is upfront cost of option premium which has to be paid. It also allows you to benefit from any favorable movement in exchange rate and protects from any unfavorable movement.
